haidi: good evening. sophie: welcome to "daybreak: asia." . haidi: our top story: asia pacific market set for the worst week so far. u.s. stocks fell a second day. the s&p losing slide.

president trump keeps jabbing at the fed. he says he knows more about monetary. -- monetary policy. shery: it down now falling more than 2% along with the s&p 500. a second session of losses. we saw the nasdaq selling off. seeing the longest winning streak this year. president trump austria's comments on the fed did not help. take a look at yields because they were falling for another session. have been falling all week after that selloff. surging after a solid 30 year option over the dollar. falling for a fourth consecutive session.

we are seeing some pressure after president trump's comments on the fed. gold futures gaining the most in two years. crude is up a quarter of a percent. of this will all play out in asia. mixie: we are looking at a end to the week. earnings.may turn to be -- k see the cost ospi snap its decline. the asx 200 leading. we are keeping a close eye on energy in light of recent commodity movement. gold hitting a 10 week high.

a weekly gain for the aussie dollar. on the data docket for australia, we are waiting or august. approval likely fell 1% after the tepid growth that we saw. euickly checking in on aussi banks. the banking industry failings d in the report are saddening and embarrassing. sophie in hong kong. we are getting breaking news on south korea unemployment. better than expected, coming in at 4% for september. coming off that 442% level that was the highest -- 4.2% level that was the highest. this is a pressure point when it

comes to president moon. beenval ratings have sinking. south korea, one of the most daemonic -- pressing economic issues is youth unemployment. let's get to first word news with jenna dagenhart. president trump he will not fire jay powell. the president also says he knows monetary policy better than powell and thinks what they are doing is wrong. larry cover those said the president is just having fun. attacked the fed plan or strategy. he has never interfered with that.

he is giving his opinion. it is an and warmed opinion. people should listen to what the president is saying. the said is independent. we have always said that. jenna: the central bank is the way doing its job. the adjustments are perfectly reasonable. instead of changing policy, most important thing is that ensure an open trade agreement. >> the growth rate is pretty good. the first thing is to avoid damaging the growth rate. a tariffnada imposing on steel imports.

continued tensions -- it does not include metal duty. prosecutors in new york city abandoned their sexual assault case against harvey weinstein. weinstein is still accused of raping an unidentified woman in a hotel room in 2013 and performing a forcible sex act on a different woman in 2006. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jenna dagenhart. this is bloomberg. you're getting an alert on bloomberg.

dana powell is no longer in the running for the you in job. she was a former deputy and advisor to do -- president trump. nikki haley has resigned. we are hearing from a white house official that she is no longer in the running you in job. nikki haley will remain until the end of the year. another ugly u.s. market session. each time the market tried to erase losses, a fresh wave of selling would hit. lots of volume. we could not get into positive territory. su: we saw the market is swinging back and forth. the selloff accelerated in the afternoon. you can see that the dollar fell.

gold surging and oil dropping below 71 in the regular session. rebounding after hours, but it was down about 3%. andade the energy sector the dow worst performer. it went down 3% in this session alone. that affected some of the big de cliners. digits not fall as much as much as it did. -- as much as it did. down 9% on the august high. oil among thethon biggest of the decliners. jpmorgan one of the banks reporting. the anticipation of higher interest rates. they got caught in the downdraft. facebook and delta one of the

few exceptions to the downside. delta rising and taking the airlines with it. strong reports about pricing power and being able to raise prices. warren buffett's company and amazon among the biggest decliners. violence that a lot of analysts are using on this selloff. for the week alone. it is down by 13 billion for the month alone. in mobile payment company that is one of the favorites on wall street has doubled going into this week. selloff beene overdone? that is the question going into friday. is it the beginning of a more serious downturn? have these volumes

that surged above the 30 day average. the s&p dropping the first time since april. you look at the charts, where the suggesting -- what are they suggesting? su: they had several opportunities. let's go into bloomberg. you can find our library of charts. yesterday we spliced through it. that is of concern. what analysts are saying, is if this happens again, it will raise serious questions as to what we are seeing -- as to whether what we are is here to stay. thisps a ray of hope is one. it is the momentum etf. it logged its worst day in history. that decline.

these are the stocks that have been the big moment some movers of the year. when you see this kind of selloff, it could represent capitulation. it is a positive thing, technically. friday is key for many chart watchers. president trump has not held back on in simulations that beijing has -- insinuations about beijing. reporter katie in. ramifications for the market. >> absolutely. the yuan acts as the anchor. if we can rewind back to the summer, back to that ugly emerging-market slump. a big part of that was because the yuan was weakening so

rapidly. mnuchin -- emerging-market assets could be in for more pain. the dollar has a very interesting dynamic. it acts as a safe haven. times of stress, investors will seek to buy the dollar. tries tosince then and stop the yuan slide, the dollar would not respond. what have we seen from policymakers in china so far? do they want to stabilize the current the -- the currency? >> the slide really stopped abruptly. in the past few days, you have seen it weaken a bit more.

the key level that markets are really watching is that seven. if we crossed five -- that. ahead, the u.s. remains committed to fair trade. will president trump shift on china? we will be live from the world knowledge for. -- forum. and markets that on jay powell's credibility. jacob will be with us at the world bank meeting. this is bloomberg. ♪

shery: this is "daybreak: asia." another day of selling on the stock markets. talking aboutp

the trade tensions. the annual meeting taking place in bali. kathleen, i'm sure will be brains about all of these things. as always. jpmorgan chairman of international. as an experts life in what drives currency. i cannot list all of his accomplishments. jacob has been there and done that. a group is about to release reports in bali. although discussions here, bloomberg news learned in the

last 24 hours that the treasury department is not going to label china as a currency manipulator. what do you think about that particular issue? are they manipulating their currency? are there other forces driving it out of their control? >> we can see in the foreign a much more u.s. dollars story than the chinese currency story. the exchange rate is something that links to currencies. the currency manipulator -- you a large current account. you need to have a large current account overall.

proving that you are systematically in the market. to prove.icult i do not believe this is the situation today. in addition to all of that, when do you recall that china was reserved as a currency manipulator or declared? it is more of a negotiating instrument. today, and dealing with china has so many issues, especially in the trade area. that the u.s., together with europe should join hands and basically approached with theirgroup grievances about intellectual property rights, especially in the technology area. a much more focused piece

instead of the current approach. is it your view that this trade war is something that weakens the yuan. i would still call it a trade skirmish. i hope it does not become a war. creates and moves throughout a safe haven. u.s. is still the safer haven. it continues to the .trengthening we should have implications for other emerging-market. more generally, we should focus. whenever there is a trade war, the world suffers. the other siders of the spectrum.

everyone, including the u.s.. one of the most pneumatic , it generated the great depression. today what is happening as an attack on globalization, corporations. i think it is very dangerous. the president has leaked about the stock market selloff. a crazy policy of raising interest rates. to a medical going diagnostic, but i can say one thing. number one, the fed is doing the right thing. strategyormalization

started long ago. it started by three or four years ago. -- interestually rates started going up. nobody was surprised in the rise in interest rates. nobody should blame it on dramatics. the reason for the drama in the reflecting much greater concern with the consequences of the trade war. those consequences are severe. of course, it will create a slower pace of investment.

it will create habits. i do not believe that it is wise or appropriate for the president or any politician to second-guess what the fed is doing. fed is very professional. they have all the data that you need. markets, whatging is the biggest risk to a global economy right now. subjectlobal economy is to geopolitical risk, including the trade area. when you have skirmishes in the industrial world, there is no single area. europe has a problem. the u.s. has a problem. brexit has a problem.

, while itas a whole is performing much better than it has during the past decade, the emerging markets on the receiving side. the shockt prevent that is emanated from the rest of the world. they can strengthen their own defenses. we learned is number one, strengthen your financial system. number two, make sure you have balance policies and number three, make sure you have functioning, flexible exchange rates. those countries have those three items and perform much better in era.ost crisis error -- the chairman of jpmorgan international.

a lot more coming today. send it back to you for now. shery: thank you so much. plenty more to come on daybreak asia. this is bloomberg. ♪

shery: this is "daybreak: asia." haidi: let's get a quick check of the business flash headlines. 7% in hongalling kong on thursday. tencent is asia's biggest stock and has lost almost 20% in a 10 day losing streak. the damage is more than 250 billion u.s. dollars. says: asian bellwether

sales remain robust in china. 1.8%.ries rose the company's are seen as reflecting the strength of the global economy. haidi: facebook says it has removed more than 800 pages that was spreading misinformation and am. facebook has already poured hundreds of pages. we are counting down to the open in tokyo. futures looking close to 4%. the yen strengthening overnight.

yesterday following the most since february. it looks like there are of this u.s. driven asian route. this is bloomberg.

haidi: markets here bringing trading for the friday session about 30 minutes from now. down about .3%, adding to those losses that we had yesterday. lowerading just about 3% when it comes to the aussie market. down inarkets closed new york. thes&p 500 broke through 200 moving day average, fishing -- finishing at 2728. longest streak of games for the year.

haidi: you are watching "daybreak: asia." let's get you the first word news with jenna dagenhart. jenna: bloomberg sources say the u.s. treasury department has -- sayingteve mnuchin that china has not manipulated the yuan. president trump has put -- has pressured steve mnuchin to declare china a currency manipulator. india has flatly rejected u.s. accusations of currency manipulation, saying it is ready to deal with any threat to the rupee. the indian economy is doing well and inflation is under control. he says global factors play in an porton -- an important role.

meeting the criteria. they will monitor. this time, the criteria will not be met. ity will continue to keep for six months or so. i'm not worried about it. hopeful that turkey will free and american pastor. he was arrested on espionage charges, part of a crackdown following a failed coup. the government of papua new guinea with increasing criticism the sports car retail for

some legend of dollars each and were flown in on jumbo jet. -- it is going to sell the cars after the summit. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. haidi: asian stocks the lowest in three of the men last year. let's see where we stand right now. here is sophie. beach energy off. oil fell to a low overnight. on fairfax and emerging document.

this is the property market share. reporting that they were hurt by new listings and auction volume. a check in on the leaderboard. we are seeing a recovery in tech stocks. halt a decline. haidi: what about the rest of asia? for a rainying start most of the stocks across the region. is set for its greatest weekly gain. it will be the focus in tokyo.

data.ors will have that gain.ng to china will escape being a tech -- min -- currency manipulator. maybe there is still hope for a happy friday. treasury secretary steven mnuchin is said to have been advised by department staff that china is not manipulating their currency. for more, we are joined by correspondent tom mackenzie. tom: the label, if it does come about is largely symbolic.

it would lead to 12 months of negotiation. certainly, officials are sensitive. they have said that they want to move towards a more market-oriented regime. there is that concern. there will be an element of relief. another area where china has pushed back against the u.s. is on the new trade deal between the u.s., mexico and canada and the exclusion of any of those striking trade deals with nonmarket economies like china. what he had to say about this issue. no exclusion.e we believe that all economies have the right to develop foreign trade and economic

elation's. they will attach importance. there is a sliver of hope around the trade tensions. beentially, they will leading the summit. haidi: is there any hope when it comes to the chinese and asian markets after this selloff? day.such a grim the shanghai composite following to the lowest levels. manager said that , investors ares likely to use that as an opportunity to allow. in terms of economic data, we

will have trade data out later. it will show what has been happening, leading up to this. saying that things have never been worse, falling to a record low. the new export orders as well slipping below that level. we will be looking for trade data. exports looking to soften. thank you so much. the meetings continue. what is on the agenda today? rishaad: of course, there is market turbulence out there. let's see what is happening underground.

thank you so much for joining us today. for you, what has been the dominant seen here? the trade war. that is the issue. are you seeing that in colombia? >> now, not so much. have not had much capital influence over the last month. why have this huge purchase then let you have? we have these with the imf. .e are buying reserves the rate has been calm. we started to buy. rishaad: that gives you a

buffer. >> we want to increase the buffer. we are going through rough times. how will those rough times affect you? >> portfolio capital might move much more. we could have oil price volatility. on top of that, we will have these trade wars. volatility is everywhere. what are the basics or the mechanisms? >> we have options. only if the exchange rate is falling. what does it ultimately

lead to? >> it depends on the private sector and how the exchange rate moves. if it moves upward, we do not buy reserves. in two years, we will talk again about the imf. we will buy reserves. is your market liquid enough? >> it is working. four years ago, we bought reserves. we have been trying every way to buy reserves. we bought the same amount of reserves. accumulate.to rishaad: let's get to the

columbia story. 10 years ago, this country was a basket case. right now. tell us what happened. >> when you look at crime rates, they move very fast. that is the first thing. , we are one of these happy floaters. we have been following this inflation targeting very strictly. we are accommodated to those. inflation is 3% now, country will grow 2.5 next year. the situation of the banks is ok.

so far, things have been moving well. rishaad: the neighborhood is not looking good at the moment, particularly in venezuela. they could actually change the game. the neighborhood is not very good. so far, the markets have been discriminating. they are tough with venezuela. rishaad: the venezuelan problem could become systemic. volatility is all over the place. thisr, markets have been ruminating. rishaad: you are confident looking ahead next year, but what will be the greatest risk to the global economy? a trade war.

process, an orderly including rates and capital, i would be very satisfied. rishaad: thank you so much for joining us today. the trade war taking place and that in mind, back to new york. shery: 20 what to come on "daybreak: asia." -- plenty more to come on "daybreak: asia." this is bloomberg. ♪

haidi: this is "daybreak: asia." shery: traits tensions has dominated conversations. the world bank is adding his

voice to the chorus of speakers morning about growing risk. ,aking exclusively to ceo giving us the biggest concerns for the world economy. been protecting a slowdown in the world economy. one is interest rates have gone up. the dollar is very strong. three, we have economy is accumulating in public and private debt. that in the context of trade disputes. seeing is it needs to slow down. abrupt slowdown, we do

not see it. it would all depend on what measures we could take. take action now. closely are you watching the dollar? is it expected to go stronger? >> we are watching miss. the highncerned about -- are we are seeing today debt levels that we had in the 80's. at that time, we had the debt crisis to deal with.

countries that are experiencing high level of debt, are they ?aking the necessary measures that somehowraying this will all go away. factors thather may undermine investor confidence, trade uncertainty is a factor. that was the world bank ceo speaking exclusively thomas haslinda amin. it is the final day of the world knowledge forum. stephen engle is there for us. >> i think the dialogue has been pretty much the same of what you are seeing down in bali.

towards bit more technology and the future. want and center of discussions. panel.be moderating a definitely, we are talking about it here. we will continue the conversation with the director of the international trade thank you -- center. thank you for joining us. have you calculated the damage this is causing? big drag ont is a growth and investment. it is on the side of risk rather than opportunity. especially those getting out of

the financial crisis. finally, we are starting to see a sunnyside to the economy. they do not like it. it is a time where they need to grow. they are lining up so is living the heart and minds of the world right now. the u.s., china or others? we are discussing about the interconnections in the economy. technology is a huge driver of interconnectedness in our economy is and is seen as very promising. this interconnectedness that technology is driving needs to be managed. it needs to be reflected in a better dialogue.

?> what will be the fallout >> risk on the high. this is my country like korea and japan, so many other countries in the middle of this they need to be much stronger and make their voices heard. you need to take action to make managed and not simply left. in year two decades of covering international trade, have you ever seen anything like this? have seen episodes of this before, but the actors were different.

i have seen most around other commodities. i do not think we have seen this in such an acute manner. >> brexit. do you expect the deal? what impact would that have? >> there has to be a deal. takeshape with this deal question mark that is the question. supporteal going to connectedness between u.k. and the rest of the european union or will it build a higher wall that would make it more to for traders on both side is to maintain growth and jobs that is the interconnectedness of their economy. >> inc. you for your time today. more coming up from the world orum.edge f

plenty more to come on "daybreak: asia." this is bloomberg. ♪

haidi: this is "daybreak: asia." and i am shery ahn in new york. strong -- ng revenues would rise as much as 5%. adding $2 billion to cost this year. shery: struggling chinese conglomerate in advanced talks

to sell. it could fetch more than $3 billion. selling assets around the world and racking the largest corporate debt in china. moving ahead. a group has spoken to thinks about finance thing and carried out due diligence. the value is 4.7 billion euros. it has a market value of more than 10 billion. let's check in on how to asia's session is setting up. limiting some of those losses. just down by 2/10 of 1%. keenly shares now swinging to gain.

this is the only asian markets to left in the green after this week. nikkei futures are looking a little them. dim.little this is bloomberg. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. sydney. asia's major markets have just opened for trade. shery: good evening from bloomberg's global headquarters in new york, i'm shery ahn. rupiah i'm sophie kamaruddin in hong kong. welcome to "daybreak: asia." ♪ haidi: our top stories this friday, asia-pacific markets set for a rough end. february.week since there are signs of stability in hong kong and china. u.s. stocks falling a second day. the s&p 500 in his longest lull. golda seeing the biggest gains in almost two years. keeps president trump

jabbing the fed. he says he knows more about monetary policy than their team. singapore,over to because we have breaking numbers on gdp figures. by 2.6%e economy grew on a year on year basis in the third quarter of 2018. that's beating expectations it would grow 2.4%. still, it is a slowdown from the previous quarter of 4.1% growth. toalso see that on a quarter quarter basis, the economy expanded by 4.7%. the estimate was of growth of 5%. faster than the previous quarter growth of 1.2%. what is really interesting is we are getting the latest headlines from the monetary authority of singapore. they have their semiannual policy meeting. they say they are increasing the slope of their currency band. they increased it in april. they meet twice a year and increased it back in april

slightly from 0% to allow for modest and gradual appreciation of the nominal effect of exchange rate. we are now hearing from the monetary authority that they have increased the slope of the currency band slightly again. core inflation is projected to rise modestly in the near-term. they have maintained the width and center of the band. they only increased slightly the slope of the currency band. that's also following their meeting in april where they did exactly that, from 0%, to allow for modest and gradual appreciation. singapore's 2018 core inflation is at 1.5% to 2%. of the find details decision, gdp numbers, and everything on the tliv . you get more on what this means

for the market. we saw a blowback on u.s. equity markets. the s&p 500 breaching the 200 day moving average. we also saw the fear gauge, the vix rise. let's see how this will play to the asian markets, here is sophie. rupiah with that backdrop --rupiah with that backdrop, we are looking for the worst and. u.s. futures now nudging higher. at the mood in tokyo, the nikkei 225 extending losses after falling on thursday. the tension may turn to earnings as it wraps up. the cosby is looking to snap an eight day decline. the jobless data will be considered. it's coming in a touch better. it is still a pain point for the moon administration. the asx 200 extending losses. oil fell to an eight week low overnight. gold miners are finding support

from bolin's overnight invest. the aussie dollar is looking steady. separate the worst weekly rise in three against the greenback. the kiwi dollar is back above 65. kiwi shares have swung to gains. a nine-day drop. this despite manufacturing pmi coming in below average for a fourth straight month. it is the only regional benchmark in the green for 2018. also on the data docket we have china's trade balance for september and indian inflation is due later this sunday. haidi: sophie kamaruddin in hong kong purred let's get the first word news with jenna dagenhart. jenna: bloomberg sources say the u.s. treasury department has advised secretary steven mnuchin that china is not manipulating the crypto --yuan. it would avert escalation of the trade war and relieve some exactly for emerging markets. president trump has pressured

mnuchin to declare china a currency manipulator. the biannual effects report will be sent out next week. tariffs on 25% imports to avoid becoming a dumping ground for u.s. duty. the government thinks considering tensions with washington, that canada, eu, and others put on. it was agreed it does not include metals duty, which will be go with separately. u.s. authorities opened investigations into whether shares of broadcom and technologies were the targets of stock manipulation scams. the agrees concern brought comes wednesday announcement that lawmakers have been given a fake memo of national security invocations -- implications. it is being investigated. the white house says goldman sachs partnered deana powell is

no longer under consideration to succeed nikki haley at the yuan. she told colleagues she was against taking the role of ambassador. president trump spoke to her twice, first on sunday before haley announced her departure. goldman ceo david coleman said he wants powell to stay at the bank. virgin group boss richard branson halted talks for saudi arabia's public investment fund. the disappearance of a critical journalist the reason. they were said to does -- discuss an investment at virgin galactic and virgin ordinates. the journalist hasn't been seen since he entered the saudi consulate on october 2. turkey says he was murdered in the building. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm jenna dagenhart, this is bloomberg. .

markets,t's get more it looks at this early stage that some of the losses in asia may be more contained. even a couple of green spots. >> they did get caught bouncing. was so extraordinary. aren't any drivers to really lead to the pain we saw yesterday. yesterday was so extraordinary. china, it was one share that rose. it went up 2%. 50 shares went limit down 10%. is, will they go further? going to allow for at least some refreshment? shery: we just had the singapore monetary authority slightly increase the slope of their currency band, which was a surprise given all the trade

tensions. they seem to be sticking to the tightening path. investors.gest for we also had south korea's implement numbers. garfield: the south korean employment numbers were a little bit better. that is still a fairly dire economic picture in. . it has been one of the worries. never mind the trade wars and everything else, it is south korea struggling. it is export dependent, it is linked to technology in the u.s.. if it is not doing well, it's hard to say it about asia in general. as far as singapore's monetary decision, there was expectation that they would stick to their needing. the fact that powell is determined to carry on with his course and keep tightening, that keeps the pressure on singapore to do so as well unless there is

something in the singapore data that indicates they can take it easy. there really isn't anything that hasn't been indicating that. shery: thank you so much for that. you can find garfield's comments on the markets live blog at bloomberg. you can get a market run down in one click. --re is export commentary there's extra commentary, as well. the u.s.-china trade war is dominating the conversation at the imf world bank annual meeting in bali as concerns grow that it could pedal the economy. some think it could couple -- topple the dollar from global nominates. let's bring in our global economics and policy editor kathleen hays. what are you hearing? just -- all of us watching and listening to bloomberg television heard a lot from jacob frankel. he is the chairman of j.p. morgan chase international,

former head of the bank of israel, given the news, given the story that bloomberg learned that the treasury department is not leaning towards declaring china a currency manipulator, that's where it started the conversation. in part, this may be because there are so many things on the plate, in terms of trade scrimmages. maybe they decided not to push this point where the criteria really don't necessarily support china being a manipulator. i did press him on the point of what is driving the yuan, is this an appropriate place for it to be? here is what he said. jacob: what we have seen in the foreign exchange markets is much more than the chinese currency story. an exchange rate is something that links two currencies and reflects policies on both sides. -- ader to be a counter

manipulator, there is criteria. angst the trade war continues, and there's concerns it will in fact the global economy. so far this week, we have been hearing people think it is in good shape. another theme i have heard expressed by more people the last couple of days is a broader question. it will take more time to get to. the dollar, given the uncertainty and volatility stemming from many of president trump's policies, tweets, how it has broiled the emerging markets. maybe the dollar is too dominant, maybe we need alternative currencies. the euro has risen, not such a big challenge for the dollar, but it is a possibility. it is interesting that one european financial official said that he sees the chinese currency itself as it gets more

transparent, as the foreign exchange market functions more fully in china, could also be a threat to the dollar. this could be boosted by the behavior.istration's that comes from a european view that is critical about trump and what he is doing. even though that is not the immediate issue, it is something more people are banding about. haidi: what about the two major stories? i'm wondering if they are gaining much traction with the voices that you have been speaking to. president trump said the fed has gone crazy to raise rates. the stock market's big selloff is the result of this. jacob, i asked him this, he feels very strongly. i feel so many people do. hey, president trump, it really is a fed rate hikes, as jacob pointed out. they have been well telegraphed. why with the stock market have a

huge selloff one because they realized the fed is raising rates? no, it has to do with concerns about the trade war escalating, manufacturing, selling to china, all of these things come together to hit the start market. we will talk more about exchange rates and emerging markets, and spillover emerging markets today with the research director for the bank of international sentiment -- settle in stations -- settle in spread he is a well-known for -- he will be able to sit down with us, korea, asia probably, why all of this means for those countries, the economies, and policy. haidi: looking for to that. kathleen hays at bloomberg's global economic symposium. still ahead, we bring up the latest earnings. when it comes to japanese retailers, they look

increasingly overseas for growth. shery: hsbc's greater china economist joins us next to way up whether washington will grant beijing a currency manipulator. this is bloomberg. ♪

shery: this is "daybreak asia," i'm shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. the u.s. treasury department has advised secretary steven mnuchin that china is not manipulating the yuan. if that is the view accepted, it would be a new escalation in the trade war and a relief in the markets. joining me now is julia wang. great to have you. i want to start off with a conversation we had earlier with jacob frankel, j.p. morgan chase is international chairman. he took a pragmatic view as to whether the issue would be added to the plethora of issues that washington now takes with

beijing. u.s. dealing with china has had so many issues, especially in the trade area. i really think the u.s., together with europe, should join hands and approach china as a group and deal with the grievances about property rights it -- intellectual property rights. once you do this, it is a much more focused issue. feel thatna doesn't deposition of a currency manipulator. is there anything that has been intervening to try to support that? does it mean it will not happen? julia: based on current criteria, china doesn't really meet those conditions. the treasury could change these

criteria, or it could signal that it is taking a more discretionary approach. even the language itself, if it is not labeled a currency manipulator, the language will be keenly watched. i think the main issue is at this point, tariffs and counter tariffs continue to come in and it has escalated. there is a lot of desire to see us not taking a further step in the trade war escalation. haidi: i want to draw your attention to one of our charts, just going through a snapshot of the selloff we saw in financial markets in china yesterday. it's concerning the shanghai shares are allowed to fall past, the 2600 level which was previously seen as a line in the sand. we didn't even get there in 2015 and 2016, when we had the stock market meltdown. would this be concerning policymakers? does it add to the pressure for

them to do more, both on the fiscal side, stimulus side, also perhaps intervening in the markets to be able to give sense of support? markets think the china have taken a distinctively more pessimistic view of how trade wars pan out. it was the first market in asia, and globally to really price in the pessimistic scenario. there were domestic concerns about deleveraging. the external demitasse challenge around the trade war was quite a big drag on sentiment. i don't see that improving. we may have meaningful breakthroughs in terms of the u.s.-china trade deal, but i think there is a limit to how much that influences the underlying economy. the chinese households don't invest in a lot of equity market. they infest far less compared with market levels.

the housing market, no equity, it affects much more. that alone means policymakers can afford to take a bit of a more relaxed view for the market correction. as far as their own domestic agenda is concerned, there is a bit more policy tweaks coming through. i think next year tax cuts will be a big thing to watch. it is a very meaningful boost to the economy in the medium-term. the impact may be more muted, but that is the direction of policy we will see in the next couple of quarters. shery: you mentioned the property markets, we see protests in china just because of how fast prices have come down. will the chinese authorities have enough firepower to react from all different sides of the economy? not just property, but also financial markets? onia: the housing market is track to see a moderate slowdown

over the next couple of quarters. bills have come down, and they have been a leading indicator on how the demand-supply dynamics will shift. that ace cut signals unit is being sold at a faster pace. it seems to underlie demand is quite strong. asple come forward to buy soon as there is a slight change in price. i think the underlying inventory or supply/demand imbalance in the market has reduced over the past couple of years. the market is in a slightly healthier position. i think there are multiple challenges the chinese economy faces over the next 12 months. trade is one, deleveraging is the other. at a margin, it does weigh on growth. so far, what has been promised is the manufacturing sectors

continue to recover, business is the mostthat is one of important pillars for the chinese economy for the short-term and medium-term perspective. haidi: what's the risks that these responses will be too slow? will they take time to implement? julia: i think we have seen a lot of policy adjustments come through since the beginning of the year. monetary policy, adjustment, we're seeing continuous efforts to stabilize growth. we see efforts to speed up fiscal spending. somehow, these will support the economy in the short-term. i do think they are accelerating, beijing is accelerating, on tax reform, tax cuts. if that comes through late this year, early next, it will be a boost. it doesn't mean the economy won't face challenges. we are in a very complex

environment where internal and external challenges interact. i think they are being extremely careful in weighing the risks and benefits. haidi: does this make the domestic structure reform and deleveraging agenda more difficult, if not, near impossible, as they try to support growth? julia: i think it definitely makes it more challenging. i see that beijing is trying to path thatast that -- is from a medium-term perspective, the best path for china. they are trying to rely on monetary policy solutions, are relying on the fx, which is ok from time to time they speculate they will. it is for the right reason. their eyes are set on the medium-term. i think it is partly because they think the trade war challenge could remain with us, even if there is a breakthrough. we could still see slower global

trade growth, we could see a more fraught relationship with the u.s. every policy change you do right now has to be on the right side, good for the chinese economy in the medium-term, as well. they are trying to stick with the medium-term. the thing i think that is underappreciated is we have seen more foreign companies getting qualified on licenses in multiple sectors. no doubt they will continue to open up the market advanced manufacturing services. all of these are the right thing to do for the medium-term. they are not as stimulated in the short-term. i think that is ok if we are still on the right track for the medium-term. shery: great to have you with us, hsbc greater china economist julia wang. you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers go to your terminals. it's also available in mobile on the bloomberg anywhere app. you can also customize your

settings to get the news on indices and assets you care about. this is bloomberg. ♪

shery: this is -- haidi: "daybreak: asia," this is haidi stroud-watts in sydney. shery: i'm shery on in new york. of 1%kkei falling 2/10 after falling the most since march. we see more downside pressure for japanese stocks. though rebounding after seeing the loss that -- longest losing streak since 2014. the korean won the weakest in one week. 3/10 of 1% --wn 0.30%. lowest level in april after u.s. stocks took a beating on wall street. said, aregarfield these green recovery, or are they get cap with the final? the big mover today is ashley

dollar one, which is we can the most in about one month since the more positive unemployment numbers. we also see a strong recovery in the aussie and kiwi dollars. ♪

haidi: it's a: 30 in hong kong, we are one hour from the opening of trading. what does the day hold when it comes to -- do we get a recovery when it comes to mainland markets? it had a horrible extreme selloff in the thursday session. hong kong also not faring better. tencent continuing to get punished. chinasee possibly the futures showing an upside. a lot of downward pressure coming on to asian stocks since the selloff fell for another session on wall street. i'm haidi stroud-watts in sydney. shery: i'm shery on a new york. you're watching "daybreak: asia." let's get the first word news with jenna dagenhart. jenna: bloomberg sources say the

u.s. treasury department has advised secretary steven mnuchin that china is nominate leading the yuan. be acepted, it would further escalation of the trade war and relieve anxiety for emerging markets. president trump has pressured mnuchin to declare china a concern -- currency manipulator. the treasury will release the fx report next week. india has flatly rejected u.s. accusations of currency manipulation, saying it is ready to deal with any threat to the rupee. saysmics affairs secretary the indian economy is doing well on most macro levels, and the fiscal deficit and inflation are under control. the rupee plays an important role. >> everybody wants to offload. they are not considered -- they are not currency manipulators. met two criteria out of three.

comes, weew edition will gladly not be met. we will be offered. we will keep it for some time. we will continue to keep it for six months. i'm not worried about it. shery: turkey says it has proof that a saudi writer was murdered in the kingdom's consulate. he has not been seen since he entered the building on october 2. riyadh insists he left in good health. he writes for the washington post. the paper says turkey has told u.s. officials it has audio and video recordings that show he was killed. sayp administration sources they are hopeful turkey will free on imprisoned american pastor when he appears in court friday. he was arrested on espionage charges in 2016, part of a crackdown following a failed coup against the president. the u.s. imposed sanctions and

higher mental tariffs on turkey. the rocket left two astronauts unable to report for duty at the international space station. the booster malfunction means potential, lengthy delays for other cruise. it has been the only way to reach the iss since the space shuttle was retired in 2011. the rockets are likely to be grounded until a full investigation has been completed. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. im'jenna dagenhart, this is bloomberg. --i'm jenna dagenhart, this is bloomberg. haidi: let's look at asian markets so far this morning. it was always going to be a difficult friday. how is it looking? sophie: after we saw asian stocks fall to a may 2017 low, we see a mixed session.

u.s. futures climbing, bonds. u.s. treasury yields are picking up. 10-year rates climbing about one basis point. i also want to highlight the seeing dollar, gaining about 1/10 of a percent. td security says there is limited room to rise, even if the monetary authority of singapore tightens. the kiwi dollar gained ground. the ndx 50 has swung after its worst drop since the financial crisis. even after manufacturing pmi came in low. kospi is holding a drop. forre seeing weakness sydney shares, led lower by fairfax related companies after domain holdings reported listings and option volumes. energy producers are slipping in australia. gold producers are climbing after a big gain.

tokyo, the nikkei 225 heading for its worst weeks in separate. financials and utilities are leading the drop. we see the retail stocks. let's check in on some of the players. it is to report warnings today. -- earnings today. this is despite the 14% increase in profit given the overseas growth the company has seen. results did meet estimates, but the profits fell and it lost its annual sales outlook. earlier, the stocks fell 5.7%. is on a two-day rise after reported earnings. shery: thank you so much, let's continue our discussion on the retail sector in japan. let's bring in kenshi go bart. also joining the discussion, tom from bloomberg intelligence. kenji, iart with you,

want to discuss what's happening to japan. fears u.s., we have seen go bankrupt. we have store closures continuing in japan. do you see any hope for those department stores? the biggest thing we see in japan these days is a clear difference between winners and losers. it is being supported by the trends that were just mentioned. one is the country is overstocked, there are money -- too many stores catering to a few customers. we need to -- we need store closures and industry consolidation. happening more in the future. whatecond thing is research data has shown, the

generics are struggling. focus on one specific region of the country or categories as opposed to trying to be everything to old people. these trends will likely continue. we need more industry consolidations going forward. they aretment stores, exclusive to the trend. shery: when we are talking about the stores, how badly will they be hit? now we see china stepping up their customs enforcement. tom: absolutely. as kenji said, it is important to be specialized in one area and do things really well. wondering they have focused on is to try to bring in those tourists to offset some of the weaker spending from domestic consumers.

that has become a bit more challenging with some of the natural disasters we have seen with the earthquake, some of the typhoons, particularly during golden week. when theuristsen -- tourist were coming back to china, we saw a step up in the enforcement of the duty. it will probably be more challenging for them, the department stores, particularly in cosmetics, were consumers may look for more money options. ,ome of the more luxury goods explosive buying has died down, the high end luxury goods were doing well. it is more the mid tier, lesser-known brands, that may start to become important for the department stores to continue to drive the tourist flow and will have to work more in terms of teaming up with its tourist agencies to bring the consumers in.

have thethink we will online component of retail being only 9%, which is low compared to the major countries. does this need to change? can local competitors be successful? are they too late to that game? japan is not necessarily the jewel of the country, the forefront of online retail. there are factors that explain that. one of them is is not the high. you have the elements that can be factored in. if you want to be pressed competent, even online, you have to use the complex happenings in the country.

if you want to be convenient, which is one of the reasons why online has been surging, you have a challenge. at the same time, amazon is close to being the largest retailer in japan. are very, these trends strong in japan, as well. it will likely continue. what we would like to see is the emergence or ecosystem of goods and services more that we see in china, even in countries like india. when you have creation services, payment support, customer support, linked to cloud services. this ecosystem of services is not really happening right now in japan. there's a very strong trend to it. china is obviously the

holy grail when it comes to demographics and demand. there are a couple of problems with the market, the trade war we have been talking about. also, the regulatory uncertainty that came into the headlines again this week with this report of crackdown on luxury goods. how much uncertainty is there? does that weigh on potential opportunities and demands? tom: i think it does. the big thing to watch is the confidence of the consumer. for the japanese retailers trying to bring in those chinese consumers, they need to figure out what the right price point is. with the trade war, there is a reasonable chance we could see consumer confidence start to come under pressure, especially if growth slows the next couple of quarters. there could be trading down. that means some of the higher ned luxury -- end luxury

department stores, but gives opportunities for the discounters. some of the things they can do to encourage the consumer to come into the store is developed more payment systems, in terms more to able to accept make sure there is a way to bring the consumer into the store from overseas. shery: i remember living in japan, the problem usually used to be that the labor shortage was strong. now we see the prime minister trying to pursue this controversial policy where you are trying to bring in more migrant workers. will that mean implications for the demographics of japan for the future of retail? r the: it is important fo country as a whole and for the industry. we are talking about 500,000 people year after year.

over 10 years, we think close to 5 million people. these numbers are extremely big. these are really happening. it is becoming more and more difficult to actually run the store because you need labor. in a country like japan, it is a very high service society, in terms of the demand for service is high quality. it is very labor intensive. the implication of that is there would be a day of reckoning. they would have to take a hard look about what kind of services they want to offer. and how much they would have to monetize for the services. despite what is happening, in terms of immigration trends and so forth, is going to have huge and locations on the service level

the retailers would have to offer to the consumers. haidi: we appreciate your time, joining us today. fromjoining us is tom bloomberg intelligence. let's take a look at how trade is happening in the asia-pacific in this friday's session after that selloff yesterday and the selloff that continues in full force in the u.s. session. the nikkei 225, session lows, still number 3/10 of 1%. extending a biggest decline since february or march. we see the cost be -- kospi a tense of 1%. we also see strength in the won. that jumped one dollar the most in a month. in sydney, pretty tepid. losses really limited to a 10th of 1%. that is a market that has given up all of its gains year to date. this is bloomberg. ♪

shery: this is "daybreak asia," i'm shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. if you are watching in asia, you can catch the latest episode at 7:00 p.m. hong kong time. this week, tom mackenzie speaks to european policy makers and business leaders about belt and road opportunities while maintaining economic sustainability and transparency. greece in his exit from the show. it is in a hurry to be the number one port in the mediterranean and europe, propelling it on its journey, it's bit of what overall in china's belt and road initiative. it is one of the biggest shippers and port operators. that status has put it at the forefront of the belt and road

initiative. china has called it a dragon said, a strategic transit linking maritime and open land -- overland routes. cosco took management of pier two in 2009 under 830 year concession, pouring millions of euros into upgrading infrastructure and building a third. . in 2016, greece sold a controlling stake in the port authority to cosco. four 370 million euros and a promise to invest at least 350 million more cosco cemented his place in the new world order. it has been a success. cosco was in the right place at the right time. korea has handled more than 4,000,020 foot containers last year, making it the third busiest in the mediterranean and number seven in europe. that is growth of almost 200%

compared with a decade earlier. the belt and rolled push of chinese firms has also stoked fear about china's so-called soft power reach and geopolitical ambitions. chinese state-owned firms now europe'sround 10% of containment terminal capacity, according to the international transport forum. the european commission welcomes the belt and road europe's containment terminal initiative, but with caveats. >> there are two major issues we int to make sure that happen all those projects financed by china and others should be economically and environmentally sustainable. r beingond calls fo competitive and open for everybody. we want it to be part of this, but all the concrete investments must be reasonable. tom: there are other concerns

beyond simply how investments are implemented. >> we have seen efforts where china has gained strategic influence in countries through the benefits of the belt and road to those countries building infrastructure and helping out ,ith development assistance then using the influence as an advantage. for example, both greece and hungry, large recipients of belt and road efforts by china, stepped forward to block a statement in the eu that would criticize china and the south china sea. shery: that was tom mackenzie. at 7:00e full episode p.m. friday in hong kong, or 9:00 p.m. in sydney and new york. stay tuned for that. now for a look at the stories on the bloomberg universe on tictoc. trumped -- kanye but it up with trump, and a claim made by apple.

tencent looking less rosy. bloomberg.com's chart shows it spiral. among the most red on the terminal is a report detailing $1 trillion of threat to the corporate bull market. check out those stories trending on bloomberg online or on the terminal. this is bloomberg. ♪

shery: this is "daybreak asia," i'm shery on a new york.

haidi: i'm haidi stroud-watts in sydney. let's get a check on the business flash headlines. halted talkson has with saudi arabia's public investment fund over the disappearance of a critical journalist. they were discussing a proposed $1 billion investment in his space company. the journalist hasn't been seen since he entered the saudi constable -- consulate. turkey says he was murdered in the building. shery: tencent's downward spiral is accelerating fast. it fell almost 7% in hong kong on thursday. it's a second worst day in seven years. asiathe biggest stock in and has lost almost 20% of its market cap in a 10 days losing streak. shares were on a downward trend for 261 days. the damage since january's high is more than $250 billion u.s. is set tona's pursuit

be moving ahead. a group led has spoken to banks about financing and diligence. they made the preliminary officer of 40 euros a a share. may have a market value of more than $10 billion. shery: three major u.s. banks report friday in new york. , and wells fargo, then bank of america and others next week. remy inocencio has a preview. what should investors be watching? ramy: it seems analysts agree there will not be much fireworks at all. we will take a look at revenue. there are notable numbers. cost controls will also be something, but not so much. let me walk you through the revenue numbers. this is according to bloomberg intelligence. expectorgan and citi, we a little bit of a rise.

5% for jpmorgan, citibank, 2%. wells fargo will fall by 2%. let me walk you through the eps. it may be the biggest number, 30% for jpmorgan. 18% for citi. 13% for wells fargo. the benefits of higher rates strong cost controls,, could be at the forefront. you are looking at net interest margins. this is apparently a slower pace of increase than what we have seen in the past 80 years. this is what banks get from the posits -- deposits. for jpmorgan and wells fargo, there is a little bit of a positive lift. for citibank, the net interest margin may fall by about two bits. islysts say the future probably more important than the past. a veteran bank analyst says the third quarter is an example of ancient history.

haidi: i guess we should look ahead to the fourth quarter then. ramy: with that, we will take a look at two major things. interest rates and the impact to banks bottom line. not only that, also loans, specifically. i want to show you what's happening with loan growth for the big three banks that are expecting. wells fargo is below the line, it is contracting. we expect more of the same. u.s. mortgages may decline 6% year on year. this against the backdrop against rising mortgage rates. i will put this up once so you can see where mortgage rates are rising. already at a seven-year high, jumping the most since donald trump was elected. this has a negative not effect for banks. we look ahead to tomorrow. haidi: thank you so much.

of course, that's it from "daybreak asia." our markets coverage continues as we look ahead to the start of trading in shock -- hong kong and china. we saw the slaughter that happened in shanghai for the biggest loss since february 2016. we are headed to that haidi: giving it all up below the 26 hundred level. we see an attempt at a recovery. stand by for the china open coming up in about half an hour. bloomberg markets, china open. we have all the opening numbers for you. this is bloomberg. ♪

it is almost 9:00 a.m. in hong kong and shanghai. this is "bloomberg markets: china open." david: market searching for direction. ahead of themism open in hong kong and china. yvonne: president trump says he knows more about monetary policy than jerome powell and his team. , this hour,ht standard life and bnp paribas. this is "bloomberg markets: china open." ♪